German government may subsidies electric cars

BERLIN (Reuters) - Germany may subsidize electric cars after the next general election in order to meet a lofty goal of 1 million fossil fuel-free vehicles on the road by 2020, according to Chancellor Angela Merkel.

"The question of how we will tackle this during the next legislative period (starting late 2013) and whether one needs more incentives - that will be decided when the time has come," Merkel told reporters on Monday.

She was speaking after a meeting of a group set up to devise Germany's electric-mobility plans, which includes experts from industry, science, unions and politics.

The German government has pledged 1 billion euros ($1.3 billion) of federal research spending on electric cars and battery technology and is planning other steps such as granting 10 years exemption from vehicle tax to owners who buy their fossil fuel-free cars before December 31, 2015.

By comparison, the French government has offered to increase cash incentives for buyers of electric cars to 7,000 euros from 5,000 euros and to double subsidies on hybrid vehicles to 4,000 euros.

Some auto-industry executives say that French-style cash incentives, which are paid out to buyers, are indispensable to meet ambitious growth targets for electric cars.

Daimler expects no more than 600,000 electric cars to be on the move across Europe's biggest economy by 2020 without French-style subsidies, Chief Executive Dieter Zetsche told ZDF television ahead of the meeting with Merkel.

But the head of the planning group said subsidies can wait.

"It wouldn't be good to start off by operating with the same measures that the French government is employing," Henning Kagermann, former CEO of business software maker SAP who oversees Germany's electric-mobility strategy told reporters.

"We believe that this (introducing subsidies) may not become an issue until we're at a more advanced stage."

Obstacles preventing electric vehicles from becoming more popular include high battery costs, limited range and an underdeveloped infrastructure.

No more than 2,272 electric cars were registered in Germany in the first eight months of the year, accounting for 0.1 percent of the overall 2.108 million passenger cars registered, according to a new study of the Centre of Automotive Research (CAR) at the University of Duisburg-Essen.

"It would be unworldly and naive to continue to pursue the goal (of 1 million electric cars by 2020)," said Ferdinand Dudenhoeffer, head of the CAR think-tank.